Thursday, 25 May 2017

Consultation on fixed costs in clinical negligence claims

Yet another consultation is underway, which could see the scales of justice tipped further towards defendants and their insurers and away from vulnerable people injured by medical malpractice.

Most people would agree that there is  little wrong with the concept of fixed costs, in theory.
The latest consultation to address them, Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims, is being conducted by the Department of Health.

Fixed costs would provide certainty to all parties and should preserve the principle that the losing
party pays while ensuring that the decision to settle or fight is made from an informed position, without the uncertainty of a large unquantified legal bill.

A predictable scheme of fixed costs might also help both the BTE and ATE insurance markets to provide simple, affordable products for solicitors and the public to purchase.
From the government’s point of view, by far and away the single largest payer of legal costs and damages in such cases, fixing the state’s costs’ liability would be very attractive. It should also encourage efficiency on the part of those bringing the claims.
However, there are inevitably issues that will have to be resolved, such as the level at which costs are initially set, how often they will be reviewed and how any adjustments, such as inflation, will be calculated.

Where fixed costs have already been established, such as RTA and portal claims, the prescribed amounts are not subject to periodic review, so their value is being eroded by inflation and market changes. This will reduce the number and suitability of solicitors willing to take on the work.

Imagine how liability insurers would react to being told premiums would also have to remain static, to match the lack of review for fixed costs.
Defendants and their insurers are invariably in a stronger financial position than claimants, and often use this to their advantage. They are not limited by fixed fees, as their solicitors are paid by their insurers, regardless of success. In contrast, claimants cannot pay more than the fixed amount unless the case is won, when a success fee (up to 25% of damages) can be added.

However, solicitors can be reluctant to take a share of the claimant’s damages, so often forego this potential entitlement. Defendants know that the claimant’s solicitor can only do so much work under a fixed fee scheme, or face making a loss and risking the firm’s future.  In some cases, such as low-value injury claims, defendants are known to exploit this advantage by forcing claimant solicitors to spend additional time on a case by denying liability, not responding promptly, raising unnecessary technical points, intimating fraud without actual allegation or providing too little or too much disclosure.

The fixed costs recoverable for experts’ fees, such as medical reports, are also typically low, creating further disparity. Defendant insurers can use their buying power and deeper pockets to instruct more experienced, better qualified experts. Individual claimants must rely on cheaper, more junior experts, putting them at a further disadvantage. The same will be true of legal expertise as claimant firms may be forced to use more junior fee earners, if rates are too low to cover the cost of experienced solicitors. This goes to the very heart of access to justice. Unless laws designed to protect and compensate innocent victims can be applied and easily accessed in the courts, then we might question whether there is any point in having such laws at all.

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